US-China Trade War refers to the escalating series of trade measures — primarily tariffs, export controls, and retaliatory counter-tariffs — imposed between the United States and China beginning in 2018 and intensifying dramatically through 2025–2026. What began as a dispute over trade deficits and intellectual property has evolved into a fundamental restructuring of global supply chains, with US tariffs on Chinese goods reaching 30–145% across hundreds of product categories. For Canadian businesses, the trade war matters because it has displaced supply chains, shifted factory pricing power, and triggered new customs enforcement postures that directly affect importers sourcing from China and the broader Asia-Pacific region.
Beyond the immediate operational adjustments — documentation, freight, CARM compliance — the US-China trade war raises a more fundamental strategic question for Canadian importers: how permanent is this environment, and how much should you restructure your business around it?
The honest answer is that no one knows with certainty how long current US tariff levels will persist, whether a comprehensive US-China trade deal will emerge, or whether the geopolitical factors driving the escalation — semiconductor competition, Taiwan, technology export controls — will intensify further. What experienced trade lawyers and logistics professionals agree on is that the structural shift underway in global supply chains is not a temporary blip. The integration of the global economy around a US-China axis that began in the 1980s and deepened through China's WTO accession in 2001 is being unwound at a pace that was unthinkable five years ago.
For Canadian businesses, this creates both risk and opportunity at a strategic level. The risk is being caught flat-footed — relying on supply chain assumptions and supplier relationships that made sense in a stable trade environment but are now fragile. The opportunity is that Canada, as a CPTPP member with trade agreements spanning Asia-Pacific, Europe, and North America, is genuinely well-positioned to be a beneficiary of supply chain diversification. Canadian importers who build flexible, multi-country sourcing capabilities now will have a structural advantage over competitors who continue to rely solely on China.
One additional variable that Canadian importers must account for in 2026 is the Canadian dollar. Trade war uncertainty, commodity market volatility, and Bank of Canada monetary policy have all contributed to meaningful CAD/USD fluctuation over the past 18 months. Since Chinese factories quote in USD and freight is priced in USD, a weakening CAD directly increases your landed costs in Canadian dollar terms — independent of any factory price changes.
Importers who set their Canadian retail or wholesale prices based on a specific CAD/USD assumption and then see the exchange rate move significantly can find their margins evaporating even when factory prices are flat. The 2024–2026 period has seen the CAD trade in a range from approximately $0.69 to $0.74 USD — a spread of more than 7%. On a $500,000 annual import program, that exchange rate range represents a $35,000 swing in landed cost. This is not theoretical — it is a real budget item that needs to be managed, either through forward contracts, supplier payment timing strategy, or simply by building a currency buffer into your landed cost models.
💡 Pro Tip: Consider asking your bank about forward exchange contracts for your next large China order. Locking in a CAD/USD rate for 90–180 days forward can remove significant uncertainty from your cost model in a volatile trade environment. This is standard practice for larger Canadian importers and increasingly accessible to smaller businesses through online FX platforms.
The Canadian importers who will emerge strongest from the 2026 trade environment are those who treat this disruption as an opportunity to build better systems. Better documentation processes. Better supplier diversification. Better freight budgeting discipline. Better compliance management through CARM. Better quality oversight over factories that are now serving new customers under financial pressure.
None of these things require a complete overhaul of your business. They require incremental, deliberate improvements to practices that — in a more stable trade environment — you might have deprioritised. The trade war has raised the stakes on getting these things right. But the businesses that rise to that challenge now will be more resilient, more margin-efficient, and better positioned than their competitors when the dust eventually settles.
To understand how this affects you as a Canadian importer, you first need to understand what's actually happened to US-China trade in 2026. It's moved well beyond the initial Section 301 tariffs introduced under the Trump administration in 2018. In 2025 and into 2026, the United States escalated tariffs on a broad range of Chinese-manufactured goods to levels that have fundamentally disrupted global supply chains — with rates on some product categories reaching 145% or higher under successive executive orders.
The impact on global trade flows has been immediate and dramatic. Chinese factories, which built their competitive advantage on serving the US market at scale, are facing a structural demand collapse from their largest customer. That has cascading consequences for pricing, capacity, and supplier relationships — all of which ripple directly into the Canadian import ecosystem.
Here's a simplified timeline of how things escalated:
| Period | Key Development | Tariff Level (US on China goods) |
|---|---|---|
| 2018–2019 | Section 301 List 1–4 tariffs introduced | 7.5%–25% on most categories |
| 2020–2024 | Phase One deal, partial exemptions, Biden maintains and extends tariffs | 7.5%–25% maintained broadly |
| 2025 Q1–Q2 | New executive orders dramatically escalate tariffs | 54%–145% on most Chinese goods |
| 2025 Q3–2026 | Partial negotiated pause on some categories, but broad escalation remains | 30%–145% across categories |
For context: a product that cost USD $10 to manufacture in China and previously entered the US with a 25% tariff cost approximately USD $12.50 landed. At 145%, that same product now costs USD $24.50 to land in the US — nearly doubling the effective cost before any other charges. For many product categories, this has made Chinese manufacturing economically unviable for the American market.
The result is not that Chinese factories stopped producing. It's that they urgently need new customers — and Canada is one of the first markets they're looking at.
💡 Pro Tip: Chinese factories that previously reserved their best pricing, fastest lead times, and most attentive account management for American clients are now, in many cases, actively prioritising Canadian buyers. This is a genuine pricing opportunity — but only if you know how to navigate the compliance risks that come with it.
It would be tempting to look at US-China tariff escalation and conclude it's not your problem. Canada has its own trade relationships, its own tariff schedules, and its own import rules through the CBSA. You're not paying American tariffs. So why does this matter?
The answer is that global supply chains don't respect national borders in the tidy way that tariff schedules do. There are at least four direct channels through which US-China trade escalation is landing on Canadian importers' desks right now.
When millions of units of product can no longer enter the US profitably, Chinese factories don't just sit on the excess capacity. They reroute it. They seek new buyers in Canada, Europe, Southeast Asia, and Australia. In the short term, this is good news for Canadian buyers: more competition for your purchase orders means better pricing and more attentive service. But it also means your existing supplier relationships are more complex to manage — factories that were primarily US-focused are now recalibrating everything from MOQs to payment terms to shipping windows.
The dramatic shift in US import volumes from China has created significant volatility in transpacific freight rates. Shipping lines that over-ordered capacity for the US market are now repositioning vessels and adjusting service routes, causing unpredictable surges and drops in rates on key lanes including Shanghai–Vancouver and Ningbo–Vancouver — two of the most important corridors for Canadian importers. In 2025, freight rates from China to the Port of Vancouver swung by as much as 60–70% within a single quarter.
Many Canadian businesses operate in integrated supply chains that pass through the United States — either because their suppliers have US distribution, because they sell into the US market, or because components move across the border. When tariffs change the economics of US supply chains, Canadian businesses feel the knock-on effect in input costs, competitor pricing, and supplier availability.
This is the channel that catches the most Canadian importers off guard. As US tariffs on Chinese goods escalate, there is a well-documented global phenomenon called tariff circumvention — where goods are routed through third countries (including Canada) to obscure their Chinese origin before re-export to the US. CBSA is aware of this risk and has actively increased scrutiny of import declarations involving Chinese-origin goods, country of origin documentation, and goods moving across the US-Canada border. Even if you have no intention of circumventing tariffs, your imports may face enhanced scrutiny simply because of the broader enforcement environment.
⚠️ Warning: If you're importing goods that are simultaneously in high demand for tariff circumvention (electronics, steel, aluminum, textiles, machinery components), expect heightened CBSA scrutiny on your shipments regardless of your compliance track record. The enforcement net is wide in 2026.
Let's talk about money. Because while the compliance risks are important, the most immediate impact most Canadian importers are experiencing is a shift in their landed cost models driven by supply chain displacement.
The pattern is playing out in two distinct ways depending on the product category.
If your Chinese supplier previously derived 40–70% of their revenue from American clients (common in sectors like consumer electronics, home goods, apparel, and hardware), that revenue has now contracted sharply. Factories in this situation are competing aggressively for non-US business. In practical terms, this can mean unit prices 10–25% lower than what you were paying 18 months ago, more willingness to negotiate MOQs down, faster sample turnaround, better payment terms, and more flexibility on customisation. This is genuinely good news for Canadian buyers who are well-positioned to take advantage — but it comes with caveats. Factories under financial pressure cut corners. Quality consistency can suffer. Delivery timelines get deprioritised as factories juggle new relationships. You need to be doing more quality oversight in this environment, not less.
For factories whose raw material inputs are subject to US tariffs (for example, factories using US-sourced steel, US-origin resins, or components that previously flowed through American distributors), the input cost picture is more complex. Some are seeing their own costs rise, which they're attempting to pass through to all buyers including Canadians. In these categories, landed cost increases of 5–15% in CAD terms are not unusual — on top of whatever currency fluctuation is doing to the CAD/USD exchange rate.
| Category | Typical Factory Situation | Price Direction for Canadian Buyers (2026) | Margin Risk |
|---|---|---|---|
| Consumer Electronics | Heavy US market exposure, significant overcapacity | Down 10–20% | Low (buyer favourable) |
| Home Textiles / Soft Goods | Mixed — many factories repositioning | Down 5–15% | Low to moderate |
| Steel / Aluminum Products | Input cost pressure, surtax exposure | Up 8–18% | High |
| Plastic / Mould Components | Variable by resin type and factory profile | Flat to up 10% | Moderate |
| Outdoor / Sporting Goods | Some factories diversifying, pricing competitive | Down 5–10% | Low |
| Industrial Machinery | Complex — US components affected | Up 10–20% | High |
The key message here is that the trade war has not created uniform price movement in either direction. You need to analyse your specific product category and your specific factory's supply chain exposure to understand what's actually happening to your costs.
Not sure where to start? Book a free 30-minute consultation with Epic Sourcing's Canadian team — we'll analyse your product category and current supplier profile to give you a clear picture of where your landed costs are heading. Book a call
Transshipment is a word you need to understand clearly if you're importing in 2026. It refers to the practice of routing goods through an intermediate country in order to obscure their true origin. In the context of the US-China trade war, transshipment typically involves Chinese-manufactured goods being shipped to a third country — Vietnam, Malaysia, Mexico, or Canada — where minimal processing occurs before the goods are re-exported, often with falsified certificates of origin claiming the intermediate country as the product's origin.
This is illegal. It constitutes customs fraud in virtually every jurisdiction. And it is actively being investigated and prosecuted by customs authorities around the world, including the CBSA in Canada.
But here's where it gets complicated for Canadian importers who are doing everything right: the enforcement response to transshipment is broad. CBSA doesn't have the resources to individually verify every shipment's origin. Instead, they use risk profiling, intelligence sharing with US CBP (Customs and Border Protection), and targeted audits of importers in sectors known to be transshipment risks. If you're importing in those sectors — electronics, textiles, steel, aluminum, certain machinery — you may find your shipments selected for enhanced examination even if your supply chain is entirely clean.
Type 1: Direct Transshipment (Active Fraud) — Goods are shipped from China to Canada or through Canada to the US with false country of origin documentation. You as the Canadian importer have no involvement; however, if goods in your supply chain have been fraudulently declared, you may still face audit exposure.
Type 2: Minimal Processing Schemes — Chinese goods are shipped to a third country (often Vietnam, Malaysia, or Mexico), where a minor process occurs (repackaging, relabelling, minor assembly), and the goods are then imported to Canada or the US claiming origin from the third country. This is often done without the Canadian importer's knowledge.
Type 3: Legitimate Routing Caught in the Net — Your supply chain is entirely legitimate. You're buying from a Vietnamese factory that genuinely manufactures your product, or you have a multi-country supply chain with real value-added at each step. But CBSA scrutiny in your sector is elevated, and your shipments face enhanced examination because your routing pattern matches a transshipment risk profile.
⚠️ Warning: In 2025–2026, CBSA has significantly increased intelligence sharing with US CBP. If a supplier you're using has been flagged by US authorities for transshipment activity, you may receive a CBSA audit notice even if your own import documents are clean. This is not theoretical — it is happening to Canadian importers right now.
Country of origin is one of the most technically complex areas of Canadian customs law, and the US-China trade war has made it dramatically more important for Canadian importers to understand. This is because two things are simultaneously true: (1) the origin of your goods affects what duties you pay in Canada, and (2) misrepresenting origin — even unintentionally — can result in penalties, seizures, and exclusion from Canadian customs programs.
In Canada, country of origin for non-preferential tariff purposes is generally determined by the "substantial transformation" rule. This means the country of origin is the country where the last substantial transformation took place — where the product was fundamentally changed in character, form, or use. A product assembled in Vietnam from Chinese components may or may not be considered Vietnamese-origin depending on the nature of the assembly and the extent of the transformation.
For products subject to CUSMA (Canada-United States-Mexico Agreement) origin rules, more specific tests apply — including tariff classification changes and regional value content requirements. For non-CUSMA purposes, substantial transformation is assessed case by case, and CBSA has discretion in how it applies the test. In recent years, CBSA's interpretation has tightened, particularly for product categories where transshipment is a known risk.
If you're sourcing from a Vietnamese or other third-country factory that uses significant Chinese-origin inputs, you need to understand whether your product's origin is defensible under Canadian customs rules. The key questions are: What percentage of the final product's value originates in China versus the claimed origin country? Does the processing in the claimed origin country represent a substantial transformation — a genuine change in tariff classification — or is it essentially final assembly or repackaging? Do you have documentation from your supplier that can substantiate the origin claim — including bills of material, supplier declarations, and production records?
📌 Note: CBSA can require an importer to provide origin substantiation documentation up to four years after the date of import. If you cannot produce that documentation, CBSA may reclassify the origin of your goods and assess additional duties plus interest. The burden of proof is on the importer — not CBSA.
CBSA's enforcement posture has shifted materially in response to the US-China trade war and the associated global transshipment risk. Understanding what CBSA is actually doing in 2026 will help you assess your own compliance exposure and make informed decisions about your documentation and supply chain practices.
CBSA uses a combination of risk scoring algorithms and intelligence inputs to select shipments for examination. In 2026, shipments in the following categories are experiencing materially higher examination rates than in previous years: electronics and electrical goods, steel and aluminum products, textiles and apparel, consumer goods from intermediate countries (Vietnam, Malaysia, Cambodia, Indonesia) in categories where those countries have seen rapid export growth to Canada coinciding with US tariff escalation, and machinery and mechanical components.
Enhanced examination can mean anything from a documentary review (CBSA requests your commercial invoice, bill of lading, and origin documentation before releasing the shipment) to a physical examination of the goods (the container is held, opened, and inspected at the port of entry, which can add 5–15 days to your clearance time and incur examination fees).
Beyond the point of import, CBSA has increased its use of post-import trade compliance audits — known as Trade Compliance Verifications (TCVs). In a TCV, CBSA selects an importer and requests documentation to verify that past import declarations were accurate, including origin claims, tariff classifications, and declared values. TCVs can cover up to four years of import history. If CBSA finds that you have consistently underpaid duties — even if the errors were innocent — you will be assessed for the underpaid amount plus interest at the prescribed rate (currently approximately 8–9% annually on overdue amounts) plus potential penalties.
CBSA and US CBP have a long-standing intelligence-sharing arrangement under the Beyond the Border framework. As US enforcement against Chinese origin fraud has intensified, the volume of intelligence sharing has increased. If your supplier has been flagged by US CBP — perhaps because one of their US customers had a shipment seized — that information may be shared with CBSA, potentially triggering scrutiny of your Canadian imports from the same supplier.
| CBSA Action | Trigger | Importer Impact | Timeline |
|---|---|---|---|
| Documentary Examination | Risk score at port of entry | Shipment held pending document review | 1–5 business days delay |
| Physical Examination | High risk score or intelligence flag | Container opened and inspected | 5–15 business day delay + fees |
| Trade Compliance Verification | Post-import audit selection | Full documentation review, potential reassessment | Covers up to 4 years of history |
| Origin Verification Request | Suspicious origin claim | Must produce origin proof within CBSA timeframe | Typically 30 days to respond |
| Seizure / Forfeiture | Evidence of fraud or prohibited goods | Goods seized, potential prosecution | Immediate |
Not sure if your documentation is solid enough to withstand CBSA scrutiny? Epic Sourcing's Canadian team offers supplier verification reports that include origin documentation review — helping you understand your exposure before CBSA does. Book a free consultation
A significant number of Canadian importers receive goods that physically transit through the United States before entering Canada — either because the goods arrive in a US port (like Seattle or New York) and are trucked across the border, or because the Canadian business has US operations that receive and forward goods. This routing pattern has always required careful compliance management, but in 2026 it carries new risks.
One misconception that has emerged in the trade community is that routing Chinese goods through a US facility can somehow convert them to "North American" origin for tariff purposes under CUSMA. This is incorrect. CUSMA's rules of origin require that goods meet specific content and tariff shift requirements based on actual production, not simply where the goods were last located before importation. Chinese goods that transit through or are merely warehoused in the United States do not acquire US or CUSMA origin. Attempting to claim CUSMA origin for Chinese-manufactured goods is customs fraud — and CBSA is specifically alert to this pattern in 2026.
Under Canadian customs law, goods imported into Canada must be marked with their country of origin in a clear and conspicuous manner — in both official languages if required by category. If goods arrive in Canada with country of origin markings that don't match the origin declared on your import documents, CBSA has grounds to hold the shipment, require re-marking at your cost, and initiate an investigation into the discrepancy. In the context of the trade war, CBSA has specifically issued guidance to importers about ensuring that country of origin markings on Chinese-made goods are accurate and not obscured or removed in transit through the US or third countries.
If you're using in-bond transit through the US or goods are stored in a US customs-bonded warehouse before importation to Canada, you need to ensure your customs broker fully understands the origin and classification of the goods before they arrive at the Canadian border. CBSA will assess goods based on their country of manufacture, not their last point of departure.
⚠️ Warning: Several Canadian importers have received CBSA penalty notices in 2025–2026 for goods that transited through US facilities and arrived with ambiguous or altered country of origin markings. Even if the alteration happened during US logistics handling without your knowledge, you as the Canadian importer of record bear responsibility for the accuracy of origin declarations. Always verify markings before goods leave the Chinese factory.
One of the most practical things you can do right now is rebuild your landed cost model from the ground up for any product you're importing from China or from countries where Chinese inputs are a significant portion of the final product. The variables have changed enough that estimates made before mid-2024 are likely to be materially inaccurate.
Your true landed cost in 2026 includes the following elements, all of which have been affected to some degree by trade war dynamics: factory price (USD, likely lower for many consumer goods), inland freight in China (largely stable but with some congestion surcharges), ocean freight (highly volatile — Shanghai to Vancouver rates have swung 60–70% within single quarters in 2025), marine insurance (typically 0.3–0.6% of CIF value, largely stable), port charges and terminal handling at Port of Vancouver (up approximately 8% from 2024 levels, budget CAD $350–650 per container), customs brokerage (CAD $200–500 per entry for standard imports), import duties (0–18% depending on HS code and origin), GST at 5% on duty-paid value, and CBSA examination fees if your shipment is selected (CAD $200–800+ depending on examination type).
| Cost Component | 2023 Typical (CAD) | 2026 Typical (CAD) | Change |
|---|---|---|---|
| Factory price (per $10,000 USD order) | ~$13,500 | ~$11,000–12,500 | Down 7–18% (category dependent) |
| Ocean freight (20ft FCL, Shanghai–Vancouver) | ~$2,800 | ~$3,500–5,500 (highly variable) | Up 25–96% |
| Port/terminal fees | ~$400 | ~$450–650 | Up ~10–15% |
| Customs brokerage | ~$300 | ~$350–500 | Up 10–25% |
| Import duties (avg. 6% rate) | Proportional to value | Proportional to value | Stable |
| CBSA examination (if triggered) | Rare | Possible for high-risk categories | New risk in model |
Adaptation, not panic, is the right response to the 2026 trade environment. Here are the concrete steps that experienced Canadian importers are taking to protect their margins and supply chains.
Step 1: Audit Your Current Supplier's US Exposure. If your Chinese factory derived significant revenue from American clients, you need to understand how that factory is performing today. Are they financially stressed? Have they taken on new customers to replace lost US volume? Has their production capacity changed? A factory under financial pressure in 2026 is a quality and delivery risk. Ask your supplier directly: "What percentage of your production currently goes to the US market? How has that changed in the past 12 months?"
Step 2: Rebuild Your Landed Cost Model with Current Inputs. Use actual freight quotes from a Canadian freight forwarder for the current quarter — not rates from 2023 or early 2024. Get at least three freight quotes on every significant shipment. Build a range (low/mid/high) into your unit cost model rather than using a fixed freight number.
Step 3: Review and Strengthen Your Origin Documentation. For every supplier you're currently using, request and review their country of origin documentation. This should include a supplier declaration of origin, a summary of where key inputs are sourced, and — for higher-value products — a production process overview demonstrating substantial transformation in the declared country of origin. If your supplier cannot or will not provide this, that is a red flag.
Step 4: Ensure CARM Compliance. Register on the CARM Client Portal and ensure your customs broker has been granted delegated authority. This is mandatory for all commercial importers. Non-compliance leads to delays at the border.
Step 5: Consider Strategic Inventory Positioning. In a volatile trade environment, the cost of holding slightly more inventory as a buffer is often lower than the cost of a supply disruption. For your highest-volume, highest-margin products, consider increasing your safety stock to cover additional lead time variability.
💡 Pro Tip: If you're selling into both Canadian and US markets, now is an excellent time to review whether your supply chain is optimised for the current tariff environment. In some cases, Canadian importers are finding that bringing goods directly into Canada first and fulfilling US orders from Canadian inventory (where feasible under CUSMA) is more cost-effective than maintaining separate US import flows subject to high tariffs.
The trade war has accelerated a trend that was already underway: Canadian businesses exploring manufacturing sources beyond China. The "China+1" strategy — maintaining China as a primary source while building capacity with at least one alternative manufacturing country — has moved from a nice-to-have risk management play to a business necessity for many importers.
Vietnam is the most developed alternative manufacturing hub for the majority of product categories Canadian importers care about — garments, footwear, furniture, electronics assembly, plastics, and light manufacturing. Vietnam has invested heavily in manufacturing infrastructure over the past decade. Critically for Canadian importers, Vietnam is a CPTPP member, and Canada has been a CPTPP signatory since 2018. Qualifying goods manufactured in Vietnam can enter Canada at preferential tariff rates — in many cases 0% duty — rather than the MFN rates that apply to Chinese-origin goods. For product categories with meaningful duty rates (6–18%), this tariff advantage alone can justify Vietnam sourcing even if the factory price is slightly higher than China.
| Country | Trade Agreement with Canada | Tariff Advantage | Manufacturing Strengths | Lead Time to Vancouver |
|---|---|---|---|---|
| China | None (MFN rates apply) | 0% advantage | Broad — electronics, goods, components | 14–20 days sea freight |
| Vietnam | CPTPP (in force 2019) | 0% on qualifying goods in many categories | Garments, footwear, furniture, electronics assembly | 18–25 days sea freight |
| India | None (negotiations ongoing) | Limited, MFN rates apply | Textiles, pharmaceuticals, engineering goods | 22–30 days sea freight |
| Mexico | CUSMA (in force 2020) | 0% on qualifying goods | Automotive, electronics, food, textiles | 7–14 days by truck/rail |
| Bangladesh | Developing country tariff preferences | 0% on garments under GPT | Garments and textiles | 25–35 days sea freight |
Vietnam's rapid emergence as an alternative manufacturing hub has not gone unnoticed by CBSA. There is significant evidence of Chinese-origin goods being routed through Vietnam with fraudulent certificates of origin. This means legitimate Vietnamese manufacturers face enhanced scrutiny of their origin documentation. If you're sourcing from Vietnam, you need to ensure your supplier genuinely manufactures there — a factory audit or third-party verification report for any new Vietnamese supplier is essential due diligence in 2026, not optional.
Want to explore China+1 sourcing for your product category? Epic Sourcing's Canadian team has direct experience with Vietnam, India, and other alternative manufacturing markets. Book a free 30-minute strategy call
The 2026 trade environment rewards importers who have experienced support — and punishes those who are navigating it alone. The complexity of origin documentation, factory vetting, freight volatility, and CBSA compliance has increased to the point where most SME importers genuinely benefit from professional sourcing support.
A sourcing agent who understands the Canadian regulatory environment — not just the Chinese manufacturing landscape — will be actively monitoring the financial health and US market exposure of the factories they work with, conducting enhanced origin documentation reviews for any supplier in a high-transshipment-risk category, advising on freight strategy, keeping clients informed of CBSA enforcement trends, and identifying genuine pricing opportunities at factories that are offering better terms to Canadian buyers as a result of lost US business.
At Epic Sourcing Canada, we offer a range of services tailored to Canadian importers navigating this environment. Our Hot Source service is designed for businesses that need to identify and validate a new supplier quickly. Our Product Wizard service is for businesses exploring product development or new categories who want to understand the full sourcing and compliance picture before committing capital. Our verification reports provide documented due diligence on specific factories — including origin documentation review, production capacity assessment, and compliance record checks — that you can use to support your own CBSA declarations.
💡 Pro Tip: If you're considering switching from a Chinese supplier to a Vietnamese or other alternative-country supplier, commission a factory audit and origin documentation review before placing an order. The cost of this due diligence (typically CAD $500–2,000 depending on complexity) is trivially small compared to the cost of a CBSA examination, reassessment, or penalty.
Canada's October 2024 surtariff announcement added a significant new dimension to the landed cost calculation for Canadian importers in specific product categories. It's worth spending time on this because the interaction between the MFN tariff, the surtariff, and GST creates a compounding effect that catches many importers off guard when they first calculate the actual duty-paid value.
Here's how the math works for an affected product category. Assume you're importing CAD $100,000 worth of goods (customs value) that fall under a surtax-affected HS code, subject to a 6% MFN tariff plus the 25% surtax. Your duty calculation is as follows: first, apply the 6% MFN duty to the customs value — that's $6,000. Then apply the 25% surtax to the customs value — that's $25,000. Then add these two amounts to the customs value to get the duty-paid value: $131,000. Finally, apply 5% GST to the duty-paid value: $6,550. Your total landed cost in duties and taxes on a $100,000 customs value shipment is $37,550 — an effective rate of 37.55% before any freight, brokerage, or other charges. This is a material increase from the 11.3% effective rate (6% duty + 5% GST) you would have paid on the same goods before the surtax was introduced.
If you're in an affected category and haven't updated your landed cost model to reflect these numbers, you may be significantly underestimating your cost of goods. The affected categories include a specific range of HS codes — check the CBSA's online tariff schedule and search for the relevant Customs Tariff Amendment Order to see whether your product codes are listed. When in doubt, ask your customs broker to run a duty calculation for your specific HS codes under the current tariff schedule.
📌 Note: The 25% Canadian surtax on certain Chinese goods applies in addition to any anti-dumping or countervailing duties that may also apply to your product category. Some categories — particularly certain steel products — face a combination of MFN tariffs, surtaxes, and anti-dumping duties that result in effective duty rates well above 50%. Know your HS codes and get a definitive duty calculation from your customs broker before you price your next order.
The trade war environment has made HS code accuracy more important than ever. An incorrect HS code — even a well-intentioned one — can result in your goods being assessed at either the wrong duty rate or under the wrong surtax regime. In 2026, CBSA's focus on tariff classification accuracy has intensified alongside its focus on origin accuracy. The two are linked: an importer who has the wrong HS code for their product may also be inadvertently applying the wrong origin rules, creating compound exposure.
If you haven't done a formal HS code review for your core product portfolio in the last 12–18 months, now is the time. Your customs broker can do this as a standalone service, and for complex product categories — particularly electronics, machinery, and anything with multiple components — it's worth getting a formal advance ruling from CBSA, which provides binding confirmation of the correct HS code and is your best protection against a classification challenge.
One additional dimension of the 2026 trade environment that's worth flagging for businesses using ecommerce supply models: Canada's de minimis threshold (currently CAD $20 for goods from most countries, with a higher threshold of CAD $40 for gifts) has come under political pressure as part of the broader response to cross-border ecommerce competition. The rapid growth of Chinese ecommerce platforms shipping small parcels directly to Canadian consumers has created significant pressure on Canadian retailers and importers, and there are active discussions about changing Canada's de minimis rules. If you're competing with direct-from-China ecommerce imports, this regulatory space is worth watching — changes to the de minimis threshold would materially alter the competitive dynamics for Canadian businesses.
No — US tariffs are applied by US Customs and Border Protection (CBP) on goods entering the United States. As a Canadian importer, you pay duties to the CBSA under Canada's own tariff schedule, which is separate from the US tariff schedule. Canadian import duties on Chinese-origin goods are generally set at Canada's MFN (Most Favoured Nation) rates — typically 0–18% depending on the product category, compared to 30–145% US tariffs on similar goods. However, the US-China trade war affects you indirectly through supply chain dynamics, freight markets, and CBSA enforcement posture, as explained throughout this guide. The short version: you don't pay US tariffs, but you absolutely feel the effects of them.
This question is more complex than it appears. There is nothing inherently illegal about operating a Canadian business that imports goods from China and sells them internationally, including to US customers. However, when goods enter the United States, they must be properly declared to US CBP with their accurate country of origin. If goods are of Chinese origin, they are subject to applicable US tariffs on that origin, regardless of where they were warehoused before being shipped. Attempting to use Canadian warehousing to obscure Chinese origin and avoid US tariffs is tariff circumvention — which is illegal under US law and can expose you to penalties from US CBP. If you're building a legitimate cross-border supply chain, work with both a Canadian customs broker and a US customs broker to ensure your flows are properly structured and compliant.
The legitimacy of a Vietnamese origin claim depends on whether the manufacturing process in Vietnam represents a substantial transformation of the Chinese inputs. Minimal processing — cutting, assembling without significant added value, relabelling — is generally not considered substantial transformation by CBSA. To verify legitimacy, request from your supplier: a supplier declaration of origin specifying the percentage of Vietnamese versus Chinese content; a bill of materials showing where each key input is sourced; a description of the production process at the Vietnamese facility; and ideally, evidence of a Vietnamese Certificate of Origin issued by the Vietnamese Chamber of Commerce (VCCI). If your supplier is reluctant to provide any of this, that reluctance is a red flag. Consider commissioning a third-party factory audit to verify the production claims independently.
CARM — the CBSA Assessment and Revenue Management system — is the CBSA's mandatory digital platform for managing commercial import transactions, duty and tax payments, and compliance reporting. If you are a commercial importer into Canada, you are required to register on the CARM Client Portal and, if you use a customs broker, formally delegate authority to your broker through the portal. Importers who have not completed CARM registration may experience delays in the release of their shipments. CARM also changes how duty and tax payments work: importers must have their own financial security (either through a direct payment account or by posting their own surety bond) for shipments above the duty-free threshold. If you haven't dealt with CARM yet, make it a priority — your customs broker can walk you through the setup process.
Canada introduced a 25% surtax on certain Chinese-origin goods in October 2024, targeting specific categories including electric vehicles, steel and aluminum products, and certain solar products. This surtax is separate from, and in addition to, standard MFN import duties. If your products fall within the surtax categories, your effective duty rate has increased significantly — and this needs to be reflected in your landed cost model. The surtax was introduced partly in response to concerns about trade diversion as Chinese goods redirected away from the US market. Check the CBSA tariff schedule and the relevant Order in Council for the current list of surtax-affected HS codes. Your customs broker can tell you definitively whether your products are affected.
CBSA and CBP do not publish lists of flagged suppliers for active investigations. However, there are indirect signals you can look for. If your shipments from a particular supplier are consistently being selected for examination while other shipments are not, this may indicate the supplier is on a risk profile list. US CBP has made public some transshipment enforcement actions — particularly against specific Vietnamese factories — and these are worth monitoring through trade news sources. Working with an experienced Canadian sourcing agent who has visibility into factory reputation and enforcement trends is one of the most effective ways to stay ahead of potential supplier-level risks. Epic Sourcing's verification reports include a review of any known enforcement flags associated with specific factories.
Yes — with the right preparation. The uncertainty in the market is real, but so is the opportunity. Chinese factories that have lost significant US market volume are actively competing for Canadian business with better pricing, lower MOQs, and more attentive service than many Canadian buyers have seen in years. The key is to take advantage of the favourable buyer dynamics while protecting yourself on the compliance side. That means doing enhanced due diligence on origin documentation, working with a sourcing partner who understands the Canadian regulatory environment, rebuilding your landed cost model with current inputs, ensuring CARM compliance, and having a clear-eyed assessment of your freight budget for 2026. Canadian importers who approach this environment systematically — rather than reactively — are finding genuine competitive advantages right now.
Whether you're reviewing your current China supply chain for compliance risks, looking for better pricing from factories hungry for Canadian business, or exploring Vietnam and other alternatives under CPTPP, Epic Sourcing's Canadian team is here to help.
We work exclusively with Canadian importers. We understand CBSA, CARM, CCPSA, and the full Canadian compliance picture. And we have on-the-ground factory relationships in China, Vietnam, and beyond that let us move quickly when opportunity knocks.
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